Risk Management Reports

August, 1999

Volume 26, No. 8

Reader Insights

Are some "risk managers" dinosaurs? Recent prognostications
from England suggest that possibility. Gordon Dickson, of Glasgow Caledonian
University, and Larry Phillips, of the London School of Economics, predicted
at the March 1999 AIRMIC (Association of Insurance & Risk Managers in
Industry and Commerce) Annual Conference, in Nottingham, that what we now
know as risk management may be superseded in the near future by decision
technology in the new "risk society." Today’s insurance risk
managers may lack the skills and savvy to survive. Their fears were echoed
by Clive Thursby, of Tillinghast-Towers Perrin, who argued that the
failure of insurance risk managers to communicate their work and their worth
to their organizations might accelerate their replacement. This is not
saying that risk management will disappear, only that some of its
purported practitioners may slip by the wayside.

The focus has changed, from separate silos of risk and traditional insurance
"financing" to greater emphasis on integration, risk assessment, and
constructing realistic controls and contingency plans. The techniques are
different and the practitioners must follow. More organizations are
seriously considering a "Chief Risk Officer." Finance and public policy risk
managers now lead the field creatively, leaving insurance risk managers
behind. Look at GARP, the Global Association of Risk Professionals. As of
July 1999 GARP has 6800 members in 85 countries and continues to grow
rapidly. It will pass RIMS, the US-based Risk & Insurance Management
Society, in membership by the end of this year to become the largest global
RM organization.

Two of my readers, one from Lancaster, Pennsylvania, and the other from
Sydney, New South Wales, echo these thoughts.

Stuart Bassett, of Marsh Inc., in Sydney, writes: "I must admit that our
discipline is severely afflicted with a case of deja vu. It is a bit like
hearing an old joke recycled. Everyone is talking about ‘integrated risk
management’ when it should be described as ‘integrated management’ or simply
‘good management.’ In a small business the concept is not new. If you fail
to identify and manage all your risks, you go out of business.

Perhaps those organizations that promote proprietorship — a sense of personal ownership
amongst all staff — are best placed to push for integration and get it
right." If risk management is actually a part of good general management, do
we need a separate specialist for the function?

Jerry Belfiglio, the risk manager at Armstrong World Industries, in
Pennsylvania, is equally critical of his own society: "In my humble opinion,
both you and Susan (Meltzer, the president of RIMS: see RMR April and June
1999) missed the most critical issue for RIMS and 90% of its 4,500+ members —
our chosen profession is an anachronism. We’re still a buggy whip
manufacturer when the horse died some years ago. Our management doesn’t know
what we do, the press doesn’t know what we do, multiple other ‘professions’
have taken our title and mantra, and we can’t speak the language of those who
stole our professional title, never to give it back! To one like you, who
moves freely among the likes of GARP, academia and RIMS on all continents,
the distinction may be blurred, but to the legions of risk managers who are
the most typical members of RIMS, the language of emerging risk is not even
Greek, it’s more akin to Martian. This is the real challenge to RIMS: how to
remain a viable and value-added force for its constituencies while continuing
to speak the language of a profession that no longer has any time on the
meter. Perhaps, like the country doctor of old, who today is joined by
hundreds of specialists from foot to follicle, the risk manager will be
joined by multiple fellow practitioners into the new millennium and beyond.
Should the profession ‘morph’ into a blend of the old and new? Perhaps, but
like the steelworkers of the ‘70s, it may be too late. For the next 15
years, the challenge to RIMS on behalf of its membership will be to maintain
some part of the pie for the skill set so typical of the vast majority of
members, while serving as the change agent for the emerging profession. I am
a member and I see no part of the Society to be a player in this area."

Jerry and Stuart make solid points. Remember that the small and flexible
outlive the large and cumbersome. Possums, horseshoe crabs and cockroaches
survive today. Dinosaurs are gone.